Midcap Mania:

Between December 2013 to Jan 2013, out of the 3247 stocks listed in BSE, 684 stocks hit their 1 year (52 week) high price. Out of these 55 are large cap, 84 are midcap and 545 are small cap. In percentage terms, 33% of large caps, 34% of midcaps and 19% of small caps hit the one year high price.

In Price to Book Value terms, sensex P/BV is 2.58, Midcap P/BV is 0.72 and Small cap P/BV is 1.03 times. In terms of Price to Earnings ratio, Sensex PE is 17.7, Midcap PE is 7.5 and Small cap PE is 62.

Since majority of large cap stocks have hit the Foreign Institutional Investor (FII) investment limit, their attention has turned towards Midcaps which have sufficient upside.

Among the 84 midcap’s which hit the roof in Dec13-Jan-14, 4 Midcap companies have turned around : SRK, Effingo Textiles., Cressanda Solutions and Risa International. These companies have turned profitable from huge losses.

There are few company specific stories. 

• For instance, Gulf Oil (Hinduja’s) has demerged its lubricant business to be merged with Hunduja Infrastructure. Post restructuring, among the residual business of real estate, explosives, mining and infra, Real estate is Gulf Oil’s wild card. The company is working on Rs.1800 Cr Bengaluru project with 30 acres IT project and 10 acre hotel, hospitality and retail space.
• Astral Poly Technik is a financially strong midcap company which has shown consistent growth in profit in last 10 years.

Among the 84 companies 16 companies have zero debt and another 12 companies have insignificant debt.

32 of these 84 companies have registered more than 100% growth in PAT.

Favorable south west monsoon,  high reservoir levels, high demand for agri inputs have benefited lots of Agri stocks. For instance :

• PI industries makes inputs for agro chem., speciality fertilizers, plant nutrients and seeds. PI’s turnover has increased 53.7% and profit has jumped 82.8%.
• Monsanto’s turnover has jumped 28% and net profit has increased 72%. Monsanto is a subsidiary of Monsanto US and is the only listed entity outside the US. They focus on maize, seeds and herbicides.
• Kaveri Seeds is another beneficiary of monsoon. It’s turnover has increased 54.5% and profits have increased 60%.. IT is one of fastest growing seed company wth network of 15000 distributors and has strong portfolio of hybrids.
• Rallis India is a TATA Group Company. Good monsoon has boosted the prospect of crop protection chemicals etc. Apart from that they have contract manufacturing alliances with several MNC agrochemical companies. Their profit has increased 23% in 1^st 9 months of FY 2014.
• Annexed is the list of these 84 Midcaps. A patient read on these stocks could be profitable!!!